Security cost basis

Hi, Ken.

All good points and good advice for Stubby - and anybody else who thinks, "Those documents are so old that I'll never need them again", and wants to throw them away.

True! Not as true as a few decades ago, but still mostly true - as of when I retired about 1990.

But, to charge anyone with fraud, the IRS would have to allege INTENT to cheat. Mere carelessness is not fraud. Negligence penalties, much less serious than fraud, might be proposed, but this is where the "good faith" arguments should be effective.

In your case, Ken, there are one or two other factors. First, it's not your tax return in question, as I understand it. IF there was any negligence, it happened long before you got involved, so any penalty - if assessed - would be against your parents, not you. And, second, if your parents still own - or owned - those stocks at time of death, you can forget about recreating all those years of transactions; the stocks will get new bases as of the date of death. Whichever parent survives will get a new basis equal to the value on the date of the first death. (That general rule almost always applies; let's not get into the details and exceptions at this point.)

Just remember that I've been retired a long time. Consult with someone who is familiar with today's rules!

RC

-- R. C. White, CPA San Marcos, TX (Retired. No longer licensed to practice public accounting.) snipped-for-privacy@grandecom.net Microsoft Windows MVP (2002-2010) (Using Quicken 2012 Deluxe R 3 and Windows Live Mail in Win7 x64)

Stubby,

Good faith counts for a something, especially if you've dug hard into the numbers.

The one thing I couldn't quite resolve to my own satisfaction was a chain of corporate acquisitions, starting with Newton Savings Bank and ending with Bank of America. Somewhere around the third or forth bank in the chain, and two or three steps short of BoA, the requisite information about how many shares of this were exchanged for how many shares of that was flat-out missing. Yeah, with quite a bit of work I could get the prices of the shares the days before and after the acquisition and the amount of shares my parents ended up with, but there's always these fractional amounts that sometimes get delivered to the holders as cash or result in changes to the ratios of shares in/shares out. Called BoA a couple of times since they were the inheritor of all these banks, but it was useless: They simply don't like responding. It's probably buried in the SEC files, but it wasn't in the on-line material. Sometimes there's news blurbs about the numbers in the financial pages of newspapers, but nothing online went back that far. So, being careful, I fudged the numbers as best I could.

I suppose that some IRS wonk could claim fraud, but this is where due diligence and common sense kick in.

If you have checkbooks that go back that far, you know how much you paid. You can get historical data from the likes of Yahoo. Further, if any of the companies are still in existence or got bought out by other public companies you can usually get stock prices on any given day going back, sometimes, 30 years. Finally, and weirdly enough, the companies whose stock you hold _do_ know that you're a stockholder and what day you became a stockholder. Calling them up can usually get you a nice clerk who can help you in that regard. Good luck!

Ken Becker